If a company owns 25% of the voting stock of Pink Co. and can exercise significant influence, dividends received will be A. credited to Cash. B. debited to Equity Investmentslong dashPink Co. C. credited to Equity Investmentslong dashPink Co. D. credited to Dividend Revenue.

Question

Business

Brennan Serrano

24 November, 05:55

If a company owns 25% of the voting stock of Pink Co. and can exercise significant influence, dividends received will be A. credited to Cash. B. debited to Equity Investmentslong dashPink Co. C. credited to Equity Investmentslong dashPink Co. D. credited to Dividend Revenue.

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Anastasia · Answer 1

C. credited to Equity Investmentslong dashPink Co.

Explanation:

With 25% voting power and the ability to exercise significant influence, Pink Co is an associate of the company.

For dividend received from associate, we subtract it from the cost of investment in associate hence it it posted as a credit entry to the account (Investment in associate).

The right option is C.